REPORTABLE  

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS. 1048-1049 OF 2011 (Arising out of S.L.P. (Crl.) Nos. 5064-5065 of 2010)    

Agricultural Market Committee A.P. etc.        …Appellants

Versus   M/S M.K. Exports, A.P. etc. etc.                     …Respondents

WITH

CRIMINAL  APPEAL NOS. 1050-1052 OF 2011 (Arising out of SLP (Crl.) Nos. 5112-5114 of 2010)

CRIMINAL  APPEAL NOS. 1053-1054 OF 2011 (Arising out SLP (Crl.) Nos. 5144-5145 of 2010)

CRIMINAL  APPEAL NO. 1055 OF 2011 (Arising out of SLP (Crl.) No. 5174 of 2010)

JUDGEMENT  

R.M. LODHA, J.  

Leave granted.

2. The Agricultural Market  Committee, Bhimavaram have  

preferred these eight   appeals,   by special  leave,  against   the  

common judgment dated April 21, 2010 passed by the  High  Court  

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of  Andhra  Pradesh  whereby  the  Single  Judge  of  that  Court  

allowed  the  petitions  filed  by  the  private  respondents  under  

Section 482 of  the Code of Criminal  Procedure, 1973 (for short  

‘Code’)  and quashed the criminal proceedings against them for  

non-payment of market fee assessed under Section 12-B(5) of the  

A.P.  Agricultural (Produce and  Livestock) Markets Act, 1966 (for  

short, ‘the Act’).   

3. For the sake of convenience, we shall notice the facts  

from one of the appeals, viz., Agricultural Market Committee, A.P.  

Vs. M/s M.K. Exports, A.P.   The respondents – M/s   M.K. Exports  

in  that  appeal  are  traders  and  were  given  licence   by  the  

appellants  for  doing  business  in  prawns,  a  notified  commodity  

under the Act.  For the assessment years 1998-99 and 1999-2000,  

the assessment of market fees was done after giving exemption to  

a certain turnover on purchases effected   outside the notified area  

of  the appellants  on the basis of  the returns submitted by the  

respondents  under the  Act.  

4. On  May 29, 2002,   the appellants issued notices to  

the respondents  to produce books of accounts for the years 1998-

99 and 1999-2000 within 7 days of the receipt of the notices to  

enable them to  assess the correct amount of market fees.  The  

notices were issued  on  the ground  that the assessment for that  

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period was done after giving exemption to certain  turnover thereby  

resulting in under-assessment of market fees.  

5. The  respondents  failed  to  produce  the  books  of  

accounts.  The notices were then issued to the respondents on  

June  27,  2002  to  show cause  as  to  why  the  exemption  given  

earlier on certain turnover for the assessment years  1998-99 and  

1999-2000  be not  disallowed;  the re-assessment for  these two  

years  be not  done and the market  fees be not  collected under  

Section 12-B(5) of the Act.  

6. The respondents challenged the show cause notices  

dated June 27, 2002 by filing writ petitions before the High Court of  

Andhra Pradesh.  The High Court disposed of the writ petitions on  

June 14, 2007 and directed the respondents (petitioners therein) to  

respond to the show cause notices and the appellants were asked  

to pass appropriate order after considering their replies.   

7. The  respondents  filed  their  reply  and  raised  certain  

objections  to  the  re-assessment  proceedings  initiated  under  

Section 12-B(5) of the Act.  

8. The  appellants  considered  the  reply  submitted  by  the  

respondents  and  vide  order  dated  November  26,  2007  re-

determined  the  turnover  for  that  period  and,  consequently,  re-

assessed the market fees.  In that order, the appellants also levied  

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penalty  equal  to  two  times the  market  fees  due,  in  addition  to  

market fees so assessed.   

9. The  respondents  challenged  the  order  dated  

November  26,  2007  by  filing  revision  applications  before  the  

Director  of  Marketing   under  Section  12-F  of  the  Act.   These  

revision applications were dismissed on March 26, 2008.

10. Thereafter  demand  notices  were  issued  by  the  

appellants to the respondents  to pay the market fees determined  

under Section 12-B(5).  The respondents did not comply with the  

demand notices.  Notices were then issued  to the respondents to  

show  cause  as  to  why  criminal  proceedings  be   not  initiated  

against them  under Section 23 of the Act.   The respondents did  

not respond to the show cause notices nor made any payment of  

outstanding market fees. The appellants were then constrained to  

file criminal complaints against  the respondents in the  Court of  

the II Additional Judicial First Class Magistrate, Bhimavaram, West  

Godavari District, A.P.

11. The  respondents  questioned  the  complaints  in  the  

petitions under Section 482 of the Code  before the High Court of  

Andhra  Pradesh  and  prayed   for   quashing  the   criminal  

proceedings.  

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12. The only   reason that weighed with the High Court in  

quashing the criminal  proceedings against  the respondents was  

that  non-payment  of  market  fees  re-assessed  under  Section  

12-B(5)  is not punishable under Section 23 of the  Act. Whether or  

not the view of the High Court is right in this regard is a question  

for determination in these appeals.  

13. Section  7  of  the  Act  is  a  regulatory  provision.   It  

provides that in a notified area, the trading in a notified agricultural  

produce,  livestock and products  of  livestock shall  be done only  

after obtaining the licence  from the concerned market committee  

and  in  accordance  with  the  conditions  of  such  licence.   Sub-

section (5) thereof provides that a  person to whom a licence is  

granted shall comply   with the provisions of the Act, the rules and  

the bye-laws made thereunder and the conditions specified in the  

licence.  

14. The provision in relation to levy of fees   by the market  

committee is made in Section 12 of the  Act.  Section 12 reads as  

under:-  

“Section  12  –  Levy  of  fees  by  the  market  Committee  -(1) The market committee shall levy fees  on  any  notified  agricultural  produce,  live  stock  or  products of live stock purchased or sold in the notified  market area at such rate, not exceeding two rupees as  may be specified in the bye-laws) for every hundred  rupees of the aggregate amount for which the notified  agricultural  produce,  live  stock  or  products  of  live  

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stock  is  purchased  or  sold,  whether  for  cash  or  deferred payment or other valuable consideration.

Explanation  I:-  For  the  purposes  of  this  section,  all  notified agricultural  produce,  livestock or products of  livestock  taken  out  of  a  notified  market  area  shall,  unless the contrary is proved, be presumed to have  been purchased or sold within such area.

Explanation II: In the determination of the amount of  fees  payable  under  this  Act,  fractions  of  ten  paise  equal to or exceeding five paise shall be disregarded”.

15. Sections 12-A to 12-G were inserted in the Act by Act  

4 of 1987.  Section 12-A reads as under:-  

“12-A.   Every  trader  in  the  notified  area,  who  is  liable  to pay fees under  Section 12,  shall  submit  such  return  or  returns  relating  to  his  turnover  in  such  manner,  within  such  period  and  to  such  authority,  as  may  be  specified  by  the  market  committee in its bye-laws.

Explanation:  For the purposes of Sections 12-A to  12-G (both inclusive) the terms, -  

(i) “market  fees”  shall  mean  the  fees  levied  under sub section (1) of Section 12;

(ii) “turnover” shall mean the aggregate amount  for  which  the  notified  agricultural  produce,  livestock  or  products  of  lievestock,  are  purchased  or  sold,  whether  for  cash  or  deferred  payment  or  other  valuable  consideration”.  

16. The entire machinery for assessment of market fees is  

provided in Section 12-B.  The said Section is as follows:-  

“12-B.   Assessment  of  market  fees:  (1)  If  the  assessing  authority  is  satisfied  that  any  return  submitted  under  Section  12-A  is  correct  and  complete, it shall assess the amount of market fees  payable by the trader on the basis thereof;  but if  the  return  appears  to  it  to  be  incorrect  or  

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incomplete,  it  shall,  after  giving  the  trader  an  opportunity  of  providing  the  correctness  and  completeness of the returns submitted by him and  after  making  such  inquiry  as  it  considers  necessary, assess to the best of its judgment the  amount  of  market  fees  due  from  the  trader.  An  assessment  under  this  section shall  however,  be  made only within a period of three years from the  expiry of the year to which the assessment relates.

(2) Where the return submitted by a trader includes  the turnover or any of the particulars thereof which  would  not  have  been  disclosed  but  for  an  inspection  of  accounts,  registers  or  other  documents  of  the  trader  made  by  an  officer  authorized under this Act before the submission of  such  returns,  the  Assessing  authority  may,  after  giving  an  opportunity  to  the  trader  for  making  a  representation in this behalf, treat such return to be  an  incorrect  or  incomplete  return  within  the  meaning  of  sub-section  (1)  and  proceed  to  take  action on that basis.

(3)  While  making  an  assessment  to  the  best  of  Judgment  under  sub-section  (1)  the  assessing  authority  may  also  direct  the  trader  to  pay,  in  addition  to  the  market  fees  assessed  a  penalty  equal  to  two  times  the  market  fees  due  on  the  turnover that was not disclosed by the trader in his  return.

(4)  Where  any  trader  liable  to  pay  market  fees  under this Act,-

(i) fails  to  submit  return  before  the  date  specified in that behalf; or

(ii) produce  the  accounts,  registers  and  other  documents after inspection; or

(iii) submits  a return subsequent  to the date of  inspection;

the assessing authority may, at any time within a  period of three years from the expiry of the year to  which  the  assessment  relates,  after  issuing  a  notice to the trader, and after making such inquiry  

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as it considers necessary, assess to the best of its  judgment, the amount of market fees due from the  trader, on his turnover for that year and may direct  him  to  pay  in  addition  to  the  market  fees  so  assessed, a penalty equal to two times the market  fees due.

(5) Where for any reason, the whole or any part of  the turnover of the trader has escaped assessment  to  market  fees  or  has  been  under  assessed  or  assessed at a rate lower than the correct rate, the  assessing  authority  may,  at  any  time  within  a  period of three years from the date on which any  order of assessment was served on the trader,

(a) determine  to  the  best  of  its  judgement  the  turnover that has escaped assessment and  assess the turnover so determined;

(b) assess  the  correct  amount  of  market  fees  payable on the turnover that has been under  assessed;

(c) assess at the correct  rate the turnover that  has  been  assessed  at  a  lower  rate,  after  issuing  a  notice  to  the  trader  and  after  making  such  inquiry  as  it  considers  necessary.  The  assessing  authority,  in  addition to the market fees so assessed, also  direct the trader to pay a penalty equal to two  times the market fees”.

17. It  would  be,  thus,  seen  that  Section  12-A  is  self-

contained. If assessing authority is satisfied  that return submitted  

under Section 12-A is correct  and complete, it shall assess the  

market  fees  payable  by the  trader  on  the  basis  thereof.   Sub-  

section (5) of Section 12-B, however, provides for reassessment,  

inter  alia,    where the whole or  any part  of  the turnover of  the  

trader  has  escaped  assessment  to  market  fees  or   has  been  

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under- assessed or assessed at  a  rate lower than  the correct  

rate.   

18. Section 12-C(1) provides  that market fees assessed  

under the  Act and the penalty levied  shall be paid by the trader in  

such  manner and within such time as may be specified in the  

notice.   Sub-section   (5) thereof provides that the penalty payable  

under the Act shall be without prejudice to the institution of any  

proceedings for an offence under the Act.  

19. The provision for penalty and prosecution is contained  

in Section 23.  To the extent it is relevant, it reads as under:-   

“23.  Penalties:-  (I)  Whoever  contravenes  the  provisions  of  Section  7  or  fails  to  pay  the  fees  levied under sub-section (1) of Section 12 shall, on  conviction  be  punished  with  imprisonment  for  a  term, which shall not be less than six months but  which may extend to one year and with fine, which  may extend  to  five  thousand  rupees,  and  in  the  case of a continuing contravention with further fine  which may extend to five hundred rupees for every  day  during  which  the  contravention  is  continued  after conviction thereof;

Provided  that  the  Court  may,  for  adequate  and  special reasons to be mentioned in the judgment,  impose a sentence of imprisonment for a term of  less than six months.

2. xxx             xxx             xxx             xxx             xxx

3. xxx             xxx              xxx        xxx             xxx

4. xxx             xxx              xxx             xxx            xxx

5. xxx           xxx            xxx            xxx           xxx”

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20. Section 23 of the  Act, thus,  provides for penalty to be  

imposed against  a person who   contravenes the provisions of  

Section 7 or  who fails to pay fees levied under sub-section (1) of  

Section 12.   

21. The fee is  levied by the market committee on sale or  

purchase  of   any  notified   agricultural  produce  or  livestock  or  

products  of  livestock   in  the  notified  market  area   by  virtue  of  

Section 12(1) of the Act.   For a levy  of  fee, it is necessary that   

amount of market fees payable by the trader is assessed by the  

assessing authority.  The procedure for assessment  is provided  

in  Section 12-B. The assessment of market fees is done under  

sub-section  (1).   Sub-section  (5)  of  that  Section,  however,  

provides that  if,  for  any reason,  the whole or any part of the  

turnover of the trader  has escaped assessment to market fees or  

has been under assessed  or assessed at a rate lower than the  

correct rate,   the assessing authority may, at any time within a  

period of three years from the date on which the assessment order  

was served on the trader, inter alia,  assess the correct amount of  

market  fees  payable  on  the  turnover  that  has  been  under-  

assessed  after issuing notice to the trader and after making such  

inquiry as it may consider  necessary.  The assessing authority,  

under Section 12-B(5) may also direct the trader to pay penalty,  

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equal to two times the market fees,  in addition to the market fees  

so assessed.   As per the Scheme of  the Act, it is the assessment  

of market fee under Section 12-B(1)   or  re-assessment under  

Section 12-B(5)  which ultimately results in levy of    fee under  

Section 12(1).   We find the  reasoning of the High Court  strange  

when  it says that further assessment of market fees made under  

Section 12-B(5) is not covered under Section 12(1).   The High  

Court  overlooked  the  explanation   appended  to  Section  12-A  

which clearly provides that for the purposes of Sections 12-A to  

12-G, ‘market fees’ shall mean  fees levied under sub-section (1)  

of Section 12.    Section 12-B and the explanation appended to  

Section 12-A taken together would leave no manner of doubt that  

assessment of market fees – whether it is done under Section 12-

B(1)  or  12-B(5)  –  is  covered  by  the  expression  `levy  fees’  in  

Section 12(1).    In other words,  whether assessment of  market  

fees payable by a trader is made under Section 12-B(1) or Section  

12-B(5), the market fees so assessed means the fees levied under  

sub-section (1) of Section  12.  The provisions being clear, non  

payment of the market fees assessed in the original proceedings  

under  Section  12-B(1)  or  in  the  proceedings for  re-assessment  

under Section 12-B(5) would mean default in payment of fee levied  

under sub-section (1) of Section 12 of the  Act.   

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22. The  learned  Single  Judge  of  the  High  Court  relied  

upon an earlier decision of that Court in the case of  B. Youdhister   

Vs. The Secretary, Agricultural Market Committee, Jogipet & Anr1.   

wherein  it was held that since there was no penal provision for the  

violations of Sections 12-A, 12-B  and 12-C, the violators cannot  

be prosecuted. The view taken  in the case of  B. Youdhister1,   in  

our opinion, is not correct view and does not lay down the correct  

law.   

23. The High Court, thus,  was clearly in  error in quashing  

the criminal proceedings against the respondents.

24. In the result, appeals are allowed and the judgment of  

the High Court dated April 21, 2010 is set aside.  

        ….……………………. J.          (R.M. Lodha)

..……………………..J.            (Surinder Singh Nijjar)    

NEW DELHI APRIL  29, 2011

1 (1991)  Cri.L.J. 277

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